Sucharita Mulpuru's Blog

eCommerce sales continue to grow rapidly, having topped $200 billion in 2011. As web shopping has been on an upward trajectory for over a decade now, these figures should shock few. We expect online sales will grow from 7% of overall retail sales to close to 9% by 2016. Key drivers of this growth include:

Aggressive deals, particularly during Q4. During key time periods in the last holiday season (e.g., Thanksgiving, Cyber Monday), more than 70% of online holiday buyers (in a joint survey with Bizrate Insights) say that they purchased online instead of in stores because deals online were better.

Innovative new business models. Among the most rapidly growing business models of the last decade were the flash sales sites, companies like Gilt Groupe and Woot. An earlier study that Forrester conducted with online shoppers showed that the majority of consumers said they spend less at traditional retailers after shopping at these daily deals sites.

More online loyalty programs. While over the years physical stores and brands have managed to capture greater shopper data with loyalty programs and private label credit card programs, online retailers such as Amazon.com have essentially created loyalty programs of their own with shipping clubs. In fact, during the holiday season in 2010, 9% of online buyers said they belonged to such a program, while in 2011 12% of online shoppers affirmed the same (again, a joint survey with Bizrate Insights).

Nearly 50% of web shoppers start their research process on Amazon or Google. Over 40% of the world’s Internet traffic constitutes daily visits to Facebook and Google. Twenty-one percent and 49% of iPhone and iPad owners respectively purchasing products via these devices. Google, Amazon, Apple, and Facebook not only absorb consumer time but are quickly becoming gateways for other eBusiness traffic. This makes the Big Four critical in the product research and sales funnel. In our recently published report, “Google, Amazon, Apple, And Facebook: What eBusiness Executives Need To Know For 2012” we help eBusiness professionals identify what’s on the horizon for these companies and what it means for them. Some key findings of the report include the following:

Google has broad ambitions to support (or displace) incumbent eBusinesses. While Google struggles to move beyond its paid search roots, eBusiness professionals will need to keep the company top of mind because it maintains a majority share of online marketing spend but promises to transform every industry from financial services to travel to health care and retail.

Amazon is disrupting retail economics. While Amazon has the smallest market cap of the four players, it is completely changing the dynamics of manufacturers and distributors.

Apps can be powerful tools to support eBusiness objectives. Companies that see apps as just extensions of web content are missing the many opportunities to enrich experiences with cameras, microphones, speakers, accelerometers, and location-sensing capabilities.

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I was called a Facebook hater last week. No ambiguity. "You're such a hater!" this woman, who happened to be a social media marketer at a large retailer, told me. I will admit, I have reservations about Facebook’s role in commerce which has no doubt made her job more difficult, but I must defend myself. I’m not a hater. In fact, contrary to all the tweets and blogs questioning Facebook’s purported $100B valuation, I actually think the company is worth all of it and probably more. (To those same critics, if Facebook with $1B in profits is overvalued, what does that say about Groupon with about as much in losses? But that’s a discussion for another day.) Here are some considerations:

44% of the world’s internet traffic visits Facebook daily. As the CEO of an internet company months ago hypothetically and brilliantly asked me in response to the question of Facebook’s valuation, “What’s half the internet worth?” Whatever the right number is, it’s a lot and when framed like that, it makes $100B seem very reasonable.

I received a curious email from one of the founders of eBags the other day. In it, he said that by bringing customer service back to the US and away from an offshore vendor, the company actually reduced customer service costs by 34% (yes, reduced!) while still growing sales by double digits in Q4. It reminded me of another article not too long ago from the Wall Street Journalthat cited Qantas as having one of the world’s best check-in experiences because the airline invested in RFID tags for passengers, a decision that the article pointed out no other airline has yet copied. These examples stood out to me because these companies managed to pull off a very difficult trick: to make contrarian investments that industry peers would consider hogwash that nonetheless pay off in spades. It’s more likely that such investments would backfire, but when they work, they succeed beautifully. Three cases in point:

As the Facebook IPO nears, all eyes are on the valuation the company will command. The vast majority of that valuation will come from the company’s digital advertising business. As for commerce, don’t expect much. About a year ago, I asked the question Will Facebook Ever Drive eCommerce? and the answer hasn’t significantly changed in the time since. Not only has Facebook seemingly been much more focused on the display ad side of the business all but dismissing retail (they rejected a keynote slot at the annual Shop.org summit last year and rumor has it that they turned down the slot following Bill Clinton at this year’s National Retail Federation big show, the trade show in all of retail), but the numbers that retailers have shared with us are no more encouraging:

Stores or fan pages on Facebook have yet to generate any significant revenue for companies as few shoppers visit brand pages or Facebook stores after becoming a fan

Few shoppers buy after seeing information posted on Facebook; a holiday study we did with GSI Commerce showed that less than 1% of revenue from retailers was attributable to social networks